GREECE has ordered its public sector bodies to hand over any reserve cash to help it meet a payment due to the International Monetary Fund (IMF) on 1st May.
They will get IOUs in return.
Greece has to pay 200m euros to the International Monetary Fund (IMF) on May 1st as well as 1.4bn euros in maturing Treasury bills on 8th May, while pensions and public sector salaries amount to around 1.7bn euros.
The order comes after the head of the European Central Bank, Mario Draghi, said that Greece needed to do much more if it wanted access to bailout funds.
Negotiators are trying to strike a deal ahead of a meeting of eurozone finance ministers on Friday.
There are mounting fears that Greece will default on its debts and exit the eurozone.
Prime minister Alexis Tsipras urgently needs money to pay government salaries as well as the country’s debt repayments.
In order to get the funding, he needs to strike a deal with eurozone lenders at the European Central Bank, the European Union and the IMF, and introduce economic reforms.
‘More work, much more work is needed now and it’s urgent’, said Mr Draghi at the weekend.
‘We all want Greece to succeed. The answer is in the hands of the Greek government.’
Asked whether Greece could default, Mr Draghi said: ‘I don’t want to even contemplate such an event – the Greek leaders repeatedly state that they want to honour all their obligations.’
The decree by the Greek government says ‘with this act, the government hopes to cover urgent needs of the state amounting to three billion euros for the next 15 days’.
Authorities from municipalities across Greece are holding emergency meetings after the government ordered reserves from state enterprises to be placed in a common account to help the country meet its financial obligations and avoid default.
Funds from anything from hospitals to local government will be made available for short-term loans to the state.
Athens Mayor Giorgos Kaminis said his municipality would argue the decree was unconstitutional, while other mayors have told local media they are considering appealing the order in court. Opposition parties have expressed outrage.
There is a flood of liquidity in the Euro area as evidenced by another interest-rate plunge through the ice into below zero territory.
Yet the place that most needs it, Greece, finds itself in a desert lacking liquidity and after last night’s move by its government there must be fears of another deposit outflow. This is a cycle which sucks ever more breath out of the Greek monetary system.
Larry Fink, the head of US investment management giant BlackRock, told a conference in Singapore today that: ‘If Greece does not capitulate, Europe has no choice but to kick Greece out.
‘The Europeans have no choice but to be firm. The outcome of Greece unwilling to meet its obligations is very negative for Greek citizens.’